Relief For the Oil and Gas Industry?

Although coal has been hardest hit by regulations from the Obama administration, the oil and gas sector has seen its fair share over the past several years. These regulations are part of the administration’s and various environmental groups’ ongoing efforts against fossil fuels. Indeed, the administration has tightened the regulatory noose on the oil and gas industry.

EPA has issued sweeping regulations, imposing millions of dollars in regulatory costs. For example, it issued the first-ever fence-line monitoring rule for benzene at petroleum refineries as well as pretreatment standards preventing wastewater from certain upstream oil and gas activities from discharging into publicly owned treatment works, required reporting of greenhouse gas emissions and exercised its right to review other agencies’ decisions on pipeline construction. Most importantly, it issued stringent regulations in 2012 and 2016 covering methane and volatile organic emissions at new natural gas and oil well sites as well as new natural gas production sites, processing sites and compressor stations. Although prevented by the Energy Policy Act of 2005 from directly regulating injection during fracking, except where diesel is involved, the 2012 and 2016 rules focused on controlling air emissions from certain fracking activities. EPA is actively considering additional regulation of existing oil and gas facilities, such as production and processing sites.

EPA specifically included the oil and gas extraction activities in its expanded National Enforcement Initiative, meaning it planned to focus its inspection resources on these types of sites. EPA uses infrared camera technology to spot leaks from tanks and valves and considers it a violation of a facility’s general duty to minimize emissions if any such leaks are found.

The Bureau of Land Management has also gotten into the act. It initially sought to regulate fracking on federal lands. However, that rule was stayed by a federal court. It has proposed additional regulation of flaring, venting and leak detection. Further, the administration has not opened up new offshore areas for drilling and severely restricted drilling on federal lands.

However, the Trump administration has been signaling, through various statements and press releases, it will repeal restrictions on domestic energy production. In a “Contract with the American Voter,” Trump pledges during his first 100 days in office to “lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal”; “allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward”; and “cancel billions in payments to U.N. climate change programs and use the money to fix America’s water and environmental infrastructure.”

Some of these promises will be easier to fulfill than others. For example, executive orders issued by the Obama administration may be revoked, and he could issue some of his own. A Trump administration could open up more federal land to energy production, and the EPA could be directed to repeal or relax previously issued regulations. Even so, it is likely all such efforts will be met with lawsuits from environmental groups and media campaigns claiming the environment will be harmed. Some changes may require congressional action, which creates the possibility of delay tactics and even filibusters.

There is an enormous amount of oil and gas yet to be extracted, which will produce extraordinary economic benefits. Certainly, this goal can be achieved in an environmentally protective manner without the current unnecessary regulatory burdens.

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